SOUTHERN CROSS CEMENT CORPORATION, PETITIONER, VS. THE PHILIPPINE CEMENT MANUFACTURERS CORP., THE SECRETARY OF THE DEPARTMENT OF TRADE & INDUSTRY, THE SECRETARY OF THE DEPARTMEN…

Southern Cross Cement versus Philippine Cement Manufacturers Corporation

The Case

This is a petition for review brought by Southern Cross Cement Corporation against the Philippine Cement Manufacturers Corporation, the Secretary of the Department of Trade and Industry, and the Secretary of the Department of Finance. At bottom, the case asks which court may review a ruling of the Trade Secretary made under the Safeguard Measures Act, and whether the Trade Secretary is bound by the findings of the Tariff Commission. It matters because the Court settles the architecture of judicial review over safeguard measures, a body of law that arrived with trade liberalization and the country's accession to the World Trade Organization.

Procedural History

The Philippine Cement Manufacturers Corporation filed with the Department of Trade and Industry an application for safeguard measures on imported gray Portland cement. After preliminary investigation, the Department imposed a provisional measure of Twenty Pesos and Sixty Centavos per forty kilogram bag. The Tariff Commission then conducted a formal investigation and, in its report, concluded that the domestic industry had not suffered and was not suffering serious injury, and recommended that no definitive safeguard measure be imposed. The Trade Secretary disagreed with that conclusion but, relying on a Department of Justice opinion, ruled that he had no alternative but to abide by the Commission's recommendation, and denied the application.

The Philippine Cement Manufacturers Corporation then filed with the Court of Appeals a petition for certiorari, prohibition and mandamus, seeking to set aside both the Trade Secretary's decision and the Tariff Commission's report. Southern Cross filed its comment, arguing that it is the Court of Tax Appeals, not the Court of Appeals, that has jurisdiction under the Safeguard Measures Act, and that certiorari was the wrong remedy. The Court of Appeals granted a writ of preliminary injunction, and later rendered a decision holding that it had jurisdiction because grave abuse of discretion was alleged. It refused to annul the Commission's factual findings, but held that the Trade Secretary is not bound by those findings, set aside his decision, and remanded the case to him for a final decision.

Southern Cross then filed the present petition before the Supreme Court, assailing the decision of the Court of Appeals. The Court gave due course and called the case for oral argument, at which it simplified the issues.

Facts

Southern Cross is a domestic corporation engaged in cement manufacturing, production, importation and exportation. The Philippine Cement Manufacturers Corporation is an association of domestic cement manufacturers, although considerable equity holdings in at least twelve of its member corporations had been acquired by three of the largest cement manufacturers in the world.

In May 2001, the Department of Trade and Industry accepted the association's application, alleging that increased importation of gray Portland cement had caused declines in domestic production, capacity utilization, market share, sales and employment, and had depressed local prices. After preliminary investigation, a provisional measure of Twenty Pesos and Sixty Centavos per forty kilogram bag was imposed for a period not exceeding two hundred days. The Tariff Commission then conducted a formal investigation, receiving position papers from both sides and visiting the facilities of the applicant companies, of Southern Cross, and of two other importers.

In March 2002, the Tariff Commission issued its report, finding that imports had increased in a manner that was recent, sudden, sharp and significant, but that the industry had not suffered and was not suffering serious injury, and that there was no imminent threat of serious injury. It recommended that no definitive safeguard measure be imposed. The Trade Secretary disagreed but, on the strength of the Department of Justice opinion, denied the application. After the Court of Appeals set aside that denial and remanded the case, the Trade Secretary issued a new decision, this time finding serious injury and imposing a definitive safeguard duty of Twenty Pesos and Sixty Centavos per forty kilogram bag for three years. Southern Cross manifested during oral argument that it was forced to cease operations in the Philippines in November 2003.

Issues

• Whether or not the decision of the Trade Secretary in connection with the imposition of a safeguard measure is appealable to the Court of Tax Appeals rather than to the Court of Appeals.
• Whether or not, assuming the Court of Appeals had jurisdiction, its decision is in accordance with law, particularly on whether the Trade Secretary is bound by the factual findings of the Tariff Commission.
• Whether or not a temporary restraining order or writ of preliminary injunction is warranted to enjoin the enforcement of the safeguard measure.

Applicable Provisions

Section 29 of the Safeguard Measures Act provides:

Section 29. Judicial Review. Any interested party who is adversely affected by the ruling of the Secretary in connection with the imposition of a safeguard measure may file with the CTA, a petition for review of such ruling within thirty (30) days from receipt thereof. Provided, however, that the filing of such petition for review shall not in any way stop, suspend or otherwise toll the imposition or collection of the appropriate tariff duties or the adoption of other appropriate safeguard measures, as the case may be. The petition for review shall comply with the same requirements and shall follow the same rules of procedure and shall be subject to the same disposition as in appeals in connection with adverse rulings on tax matters to the Court of Appeals.

This is the provision that fixes the court with jurisdiction to review the Trade Secretary's ruling, and its interpretation is the heart of the case.

Section 5 of Rule 7 of the 1997 Rules of Civil Procedure, on forum shopping, provides:

the acts of the party or his counsel clearly constitute willful and deliberate forum shopping.

This is the standard the Court applies in rejecting the charge of forum shopping against Southern Cross.

Ruling

On the first issue, the Court held that it is the Court of Tax Appeals that has jurisdiction to review the Trade Secretary's ruling, whether he imposes or declines to impose a safeguard measure. Section 29 of the Safeguard Measures Act yields three requisites for the Court of Tax Appeals to acquire jurisdiction: there must be a ruling by the Trade Secretary; the petition must be filed by an interested party adversely affected by the ruling; and the ruling must be in connection with the imposition of a safeguard measure. The Court held that a decision not to impose a measure is still a ruling in connection with the imposition of a safeguard measure. It refused to sanction split jurisdiction, reasoning that the power to adopt or withhold a safeguard measure emanates from the same statutory source, and that it would be unwise for one appellate court to review a positive determination and another a negative one. The Court also noted that the later law expanding the jurisdiction of the Court of Tax Appeals expressly covers decisions to impose or not to impose safeguard duties, but could not be applied retroactively to this case.

On the second issue, the Court held that the Court of Appeals erred in taking cognizance of the petition, because certiorari is available only when there is no plain, speedy and adequate remedy in the ordinary course of law, and the petition for review before the Court of Tax Appeals was exactly such a remedy.

On the third issue, the Court declined to grant provisional relief, because it would be tantamount to enjoining the collection of taxes, which is traditionally frowned upon. Section 29 of the Safeguard Measures Act itself provides that the filing of a petition for review shall not stop, suspend or otherwise toll the imposition or collection of the appropriate tariff duties or the adoption of other appropriate safeguard measures.

The Court likewise rejected the charge of forum shopping, holding that the standard requires willful and deliberate forum shopping, implying a malicious intent to subvert procedural rules, and that such state of mind was not evident in this case.

Doctrine

First, jurisdiction to review a ruling of the Trade Secretary in connection with the imposition of a safeguard measure belongs to the Court of Tax Appeals, and this includes a ruling that declines to impose the measure. Split jurisdiction is abhorred; the power to adopt or withhold a safeguard measure comes from one statutory source, and review of both must lie in one court.

Second, the special civil action of certiorari is not available where the law provides a plain, speedy and adequate remedy in the ordinary course of law, such as the petition for review under Section 29 of the Safeguard Measures Act.

Third, the filing of a petition for review does not stop, suspend or toll the imposition or collection of safeguard duties, and courts will not enjoin the collection of taxes absent a clear statutory basis.

Fourth, a finding of forum shopping requires willful and deliberate acts showing a malicious intent to subvert procedural rules.

Disposition

The Court granted the petition of Southern Cross, set aside the decision of the Court of Appeals for lack of jurisdiction, and held that it is the Court of Tax Appeals that has jurisdiction to review the ruling of the Trade Secretary.

Remember This

Memorize this line: it is the Court of Tax Appeals, not the Court of Appeals, that reviews the Trade Secretary's safeguard ruling, whether the measure is imposed or not, because split jurisdiction is abhorred. Examiners use this case to test jurisdiction over safeguard measures under the Safeguard Measures Act, the requisites of certiorari, and the rule against enjoining the collection of taxes.